Tranfer ownership of an Single member LLC to another person who will maintain the entity as an LLC also. Do you need to file a resignation of the original managing member and then substitute the name of the new owner as the new managing member. Is this correct?
In many states, for LLCs there are certificates of ownership issued that represent your ownership interest. These should have been issued to you at inception of operations and funding of the LLC. The usual method of transferring ownership is to transfer the certificate of ownership to the new owner. You should look at your corporate minute book and meet with corporate counsel in your state to have the proper documentation prepared to effectuate this transfer legally and to protect your tax position on such sale.
Hope this helps. If you think this post was helpful, please check the thumbs up (helpful) tab below. Thanks.
Mr. Fromm is licensed to practice law in PA with offices in Philadelphia and Montgomery Counties. He can be reached at 215-735-2336 or at the email address listed below. He has received a 9.7 rating from AVVO and recently was featured as a 5Star Wealth Manager in the Philadelphia Magazine, November 2009 issue on page 123.
Mr. Fromm is ethically required to state that the response herein is not legal advice and does not create an attorney/ client relationship. Also, there are no recognized legal specialties under Pennsylvania law. Any references to a trust, estate or tax lawyer refer only to the fact that Mr. Fromm limits his practice to these areas of the law. These responses are only in the form of legal education and are intended to only provide general information about the matter within the question. Oftentimes the question does not include significant and important facts and timelines that if known could significantly change the reply or make such reply unsuitable. Mr. Fromm strongly advises the questioner to confer with an attorney in their state in order to ensure proper advice is received.
By using this site you understand and agree that there is no attorney client relationship or confidentiality between you and the attorney responding. This site should not be used as a substitute for competent legal advice from a licensed attorney that practices in the subject area in your jurisdiction, who is familiar with your specific facts and all of the circumstances and with whom you have an attorney client relationship. The law changes frequently and varies from jurisdiction to jurisdiction. The information and materials provided are general in nature, and may not apply to a specific factual or legal circumstance described in the question or omitted from the question.
Circular 230 Disclaimer - Any information in this comment may not be used to eliminate or reduce penalties by the IRS or any other governmental agency.
Mergers / Acquisitions Attorney
Short answer - the filing of the annual list with the Secretary of State does not transfer ownership of the LLC.
An interest in a Nevada LLC is personal property, whether it is represented by a certificate or not. You should review the LLC's Operating Agreement to see if there are specific procedures applicable to the transfer of the membership interests. If there is a certificate, it problably has an endorsement form on the reverse side that the seller should sign. If there is no certificate or if there is no endorsement form you can transfer the interest with a separate transfer powerr that is signed y the seller. The specific language of the transfer power is beyond the scope of this answer so I won't recite it here but you can probably find one for Nevada on the web.
The transfer isn't complete by delivery of the endorsed certificate of the transfer power. The transfer must be reflected on the books of the LLC and, in most states, the purchaser needs to be admitted as a new member. That should be handled at the same time as the signature of the endorsement or transfer power. If the purchaser isn't admitted as a member, he will normally have only an economic interest in the LLC and will not have voting rights or other powers that are held by the member.
If you find the above information helpful, please let me know by clicking the "thumbs up" button below.
DISCLAIMER - Mr. Wilson is licensed by the State of Texas and practices in the areas of business entities, mergers and acquisitions, and securities regulations. The Texas Board of Legal Specialization does not certify attorneys in those specialities. The above information is for educational and informational purposes only and does not constitute legal advice. No attorney client relationship is created or implied by answering questions on Avvo.com.
4 found this helpful